UNITED SOUTHERN
STATES
DISTRICT OF
COURT NEW YORK
DISTRICT
ARISTA
RECORDING LLC; ATLANTIC CAPITOL MUSIC; RECORDS, INC.; ELEKTRA ENTERTAINMENT GROUP INC.; INTERSCOPE LAFACE RECORDS RECORD RECORDS; LLC; MOTOWN PRIORITY RECORDS SONY BMG MUSIC COMPANY, L.P.; LLC; UMG ENTERTAINMENT; RECORDINGS, INC.; VIRGIN RECORDS AMERICA, INC.; and WARNER BROS. RECORDS INC.,
RECORDS
CORPORATION;
BMG
06 Civ.
5936
(GEL)
Plaintiffs,
Vo
ECF
CASE
LIME
WIRE
LLC;
LIME
GROUP WIRE
LLC;
MARK
GORTON;
LIMITED
GREG
and BILDSON; PARTNERSHIP,
M.J.G.
LIME
FAMILY
Defendants.
PLAINTIFFS' SETTLEMENT EXHIBITS AND
MEMORANDUM RELATED TO THEIR AND
OF
LAW
IN
OPPOSITION 2003 OBJECTIONS SUMMARY PLAINTIFFS'
TO
DEFENDANTS' TO PLAINTIFFS'
PRE-AUGUST FOR TO
MOTION MOTION
PARTIAL STRIKE
JUDGMENT EXHIBITS
DEFENDANTS'
Katherine Teena-Ann Joanne
B. Forrest V. Sankoorikal M. Gentile SWAINE Avenue 10019 & MOORE LLP
CRAVATH,
825 New
Eighth
York, NY
(212) 474-1000
LLC; Attorneys for Plaintiffs Arista Records Atlantic BMG Music; Recording Corporation; Capitol Records LLC," Elektra Entertainment Group Inc.; Interscope Records; LaFace
Records
LLC; Motown
Records
Record
Company, L.P.;
BMG Music
Priority
November
LLC;
UMG
Sony
and
Entertainment;
Recordings, Inc.;
Warner Bros.
Virgin
7,
2008
Records Records
America,
Inc.
Inc.;
TABLE
OF
CONTENTS 1 3
Preliminary
Argument
I°
Statement
..........................................................................................................
.............................................................................................................................
EVIDENCE NOT A°
THAT
PRE-DATES
.................................................................................................
AUGUST
4, 2003
AND
GROKSTER
IS 3
PRECLUDED
Defendants'
Now Seek the
to
Waived Exclude of
Their
Objections by Using
the
Evidence
They
3
...................................................................................
B°
Neither
Limitations, Nor the "ContinuingInfringement Doctrine", Nor the Chevron Exception to the Principal
of
on
Statute
Retroactivity Admissibility
that
Are
Rules
of Evidence
.......................................................................
and
Thus
Have
No
Bearing
4
of Evidence the
C°
Evidence Because Such
Pre-dates
Grokster
Decision and Claim
is Admissible Even for If It Does
Grokster Evidence
Applies Retroactively
is Relevant
to
Not,
7
Plaintiffs'
Contributory
Infringement
II. RULE 408 DOES
.................................................................................................
NOT
RENDER
THE
PROFFERED
EVIDENCE 11
INADMISSIBLE No Rule 408
...................................................................................................
Does it Does
Not Not
Bar
Admission
of the Evidence "Conduct
or
in Exhibit Made
A in
..............
Because
Constitute
Statements R. Evid.
Compromise Negotiations"
°
Pursuant Seek
to
to
Fed.
408(a)(2)
12
Evidence Because Kind Other
Defendants
It Has
To Exclude Do with
Is Admissible of
Nothing
Negotiations
Any
12
................................................................................................
°
Evidence
that
Defendants
It Relates Efforts
to to
Seek
to
Exclude
not
Is
Admissible
Negotiations,
B° The and Defendants
Because
or
Business,
with
Settlement,
Law
.....................
to
Comply
408 In
the
14
Have
to
Waived the
Any Rule
Same Facts
Continuing
Invoke
Objection By Invoking Support of Their Own
22 25
Claims Conclusion
........................................................................................................
.........................................................................................................................
Table
of Authorities
Page(s)
Cases
Allen-Myland,
vacated Am. Dream Jan. Am. Soc
on
Inc. other
v.
Corp., 693 F. Supp. 262 (E.D. Pa. 1988), grounds, 33 F.3d 194 (3d Cir. 1994)
................................................
Int 'l Bus.
Mach.
22
Enter.,
Inc.
v.
Trump, No. 95 Civ. 0625, 1997
WL
3275
(S.D.N.Y.
6
3, 1997)
...................................................................................................................
& Publishers 'y of Composers, Authors 912 F.2d 563 (2d Cir. 1990) Inc., Inc.
v.
v.
Showtime/The
Movie
Channel,
24
................................................................................
Big 0 Tire Dealers,
Cir.
Goodyear
Tire
& Rubber
Co., 561 F.2d
1365
(10th
16
1977)
v.
.....................................................................................................................
Blu-J, Inc.
Kemper
v.
C.P.A.
Group,
916
F.2d 47
637
(1 lth
Cir.
Cir.
1990)
.......................................
................................
20
Capobianco
Chevron Oil
City of New
v.
York, 422 F.3d
97 Cir.
(2d
2005)
4, 22 3, 8, 9
6
Co.
Huson, 404 U.S.
140 F.3d 433
(1971) 1998)
...........................................................
Cooper
Deere Ditto
v.
Parsky,
v.
(2d
...................................................................
& Co.
IntTHarvester 510 F.3d
Co., 710 F.2d
1070
1551
(Fed.
...............................................................
Cir.
1983)
................................
16 8
v.
McCurdy,
v.
(9th
936
Cir. F.2d
2007)
1131
Eisenberg
Gero
v.
Univ.
of NewMexieo,
535 F.
(10th
Cir.
1991)
.................................
22 6 8 22 8 5 8
The
Seven-Up Co.,
Supp.
509 W.D. 55
212
(E.D.N.Y.
86
1982)
..........................................
Harper
In
re
v.
Virginia Dep "t of Taxation,
333 B.R. 261
U.S. Pa.
(1993)
.................................................
Groggel,
Co.
v.
(Bankr.
222 U.S.
2005)
.......................................................
Kalem
Harper Bros.,
(1911) (2d
Cir.
..................................................................
Kregos Margo
v.
Associated
Press, 3 F.3d
55
656 Cir.
1993)
.......................................................
v.
Weiss, 213 F.3d
v.
(2d
2000)
........................................................................
Mendelovitz
Adolph
Coors
Co., 693 F.2d
v.
570
(5th
Cir.
1982)
......................................
16
Metro-Goldwyn-Mayer 2004) Metro-Goldwyn-Mayer
Studios, Inc.
Grokster,
Ltd., 380 F.3d
1154
(9th
Cir. 17
............................................................................................................................
Studios, Inc.
v.
Grokster,
ii
Ltd., 543 U.S.
1032
(2004)
.................
18
Metro-Goldwyn-Mayer
Cal.
Studios, lnc.
v.
Grokster,
Ltd., 454 F. Supp. 2d 966 (C.D. 7, 8
2006)
...................................................................................................................
Metro-Goldwyn-Mayer
RamadaDev. Co. Prods. lnt
v.
Studios, lnc.
v.
Grokster,
1097
Ltd., 545 U.S.
Cir. Unit Cir. B
913
(2005)
...........
passim
20, 21
12
Rauch, 644 F.2d
v.
(5th
1234
1981)
............................
Raybestos
Rondor
Co. 'l
Younger,
54 F.3d
(7th
1995)
.......................................
Music Cal.
v.
TVT Records
LLC, No. CV 05-2909, 2006
WL
5105272 12
(C.D.
S. R Sadhu
Aug. 21, 2006)
H.W.
............................................................................................
'y. Co.
v.
Vaughn,
Trust 577
359
F.2d
424
(5th
Cir.
1966)
................................................
22 Commc
Singh Hamdad 503 F. Supp. 2d
lnc.
v.
v. Ajit Newspaper Adver., Mktg. (E.D.N.Y. 2007)
...........................................................................
and
"ns, lnc.,
5
SirSpeedy,
L &P
Graphics, lnc.,
957
F.2d
1033 464
(2d
U.S.
Cir. 417
1992) (1984)
.........................
5, 6
9 5 16 16
Sony Corp. of Am.
Stone Union Union United United Universal A.L.R. Watson
v.
v.
Universal 1043
City Studios, lnc.,
(2d Cir.
............................
Williams, 970 F.2d
Carbide Carbide States States
1992)
.................................................................
Corp. Corp.
v.
v.
MontellN. Montell 509 365 N. F.2d F.
V., 28 F. Supp. 2d 833 (S.D.N.Y. 1998) K, 944 F. Supp. 1119 (S.D.N.Y. 1996)
793
....................
v.
.....................
Ashdown, Saneaux,
Australia 2005 R.R.
(5th
2d 493
Cir.
1975)
.................................................
5, 6
........................................
v.
Supp.
v.
(S.D.N.Y.
License
2005)
6
Music 1
Pty. Ltd.
WL
Sharman
Holdings
Ltd.
(2005) 220
18
(Austl.),
lsland
2119310
..........................................................................
v.
Long
v.
Co., 500 F. Supp. 2d 266 (S.D.N.Y. 2007)
381 F.
.......................
4, 22
......................
Wechsler
HuntHealth
Sys., Ltd.,
Supp.
2d
135
(S.D.N.Y. 2003)
12
Statutes Fed.
& Rules 408
R. Evid.
.......................................................................................................
passim
°°°
111
Other Jack
Authorities B. Weinstein and
Margaret
A.
Berger,
Weinstein's
Federal
Evidence
(2d ed.
24
1986)
............................................................................................................................
iv
Plaintiffs
Arista
Records
LLC, Atlantic
Entertainment
Recording Corporation, Group Inc., Interscope
BMG
Music, Capitol Records,
LaFace Records
Inc., Elektra
Record
Records,
LLC, Motown
Company,
L.P., Priority Records
Records
LLC, Sony Inc., and
of Law in
BMG
Music
Entertainment,
Records Inc.
UMG
Recordings, Inc., Virgin
submit
America,
Memorandum
Warner
Bros.
(collectively, "plaintiffs")
Settlement Related and
this
Opposition
Plaintiffs'
Motion
to
to
Defendants'
Pre-August
2003
Objections
and Defendants'
to
Exhibits
to
Their
Motion
for Partial
Summary Judgment
reasons
Strike
Plaintiffs'
and their
Exhibits.
motion
For
the
that follow, defendants'
objections
should
be overruled
denied.
Preliminary
In addition
to
Statement of law in
their
two
memoranda
opposition
submitted
to
plaintiffs'
three
single
motion
for
partial
1
summary These
judgment,
motions
defendants
have
separate
of
"evidentiary"
documents
and the two
motions.
challenge
pages
the
admissibility testimony
three
of dozens
defendants
themselves
produced,
of
2
of their
own
witnesses
reports of plaintiffs' expert
witnesses.
All
motions
are
meritless.
1
Defendant's
Ph.D Exhibits and
other
two
motions
are
Defendants' from
Motion the
to
Exclude
Plaintiffs' of Ellis
Proffered
Expert Summary Judgment
and Richard and P.
Evidence
Horowitz,
Plaintiffs'
Waterman,
to
Ph.D., and Defendants'
to
Depositions and Reports Objections to
for Partial and
Deposition Excerpts
Motion Strike
Their
Motion Exhibits
Summary
Judgment
2
Defendants' 56.1
Plaintiffs'
Deposition Excerpts.
to
Plaintiffs' B.
to
Statement
was
supported by Volumes
2008
I to VII
the
Declaration
of
Katherine
Forrest, dated
defendants' Volumes
July 18,
two
were
oppositions supported by September 26, 2008
56.1
56.1
to
VIII
("Forrest 7/18/08 Decl."). Plaintiffs' facts thereto, Statements, as well as the additional X to the Declaration B. Forrest, dated of Katherine
Plaintiffs
two
statement,
their
included memorandum motions.
thereto; the
of law Documents
("Forrest Decl."). oppositions to defendants supporting exhibits; both
9/26/08 in support of their cited motion herein
hereby incorporate
s
here facts
their
56.1
and
their
additional and their
Forrest and in
declarations;
(or excerpts)
opposition to defendants ("Ex. __") are consecutively
to
numbered
in
Defendants'
defendants
objections plaintiffs'
on
this
motion
fall into
two
categories. First, they pre-date August 4, object plus
decision
to
object
to
83 of
exhibits
on
the
grounds
and
that
2003, the beginning of the applicable limitations
of the exhibits
to which
period,
also
84 exhibits
(all
defendants
the
object
as
to
pre-August 4,
June
2003
one
additional
exhibit) because
they pre-date
lnc.
Supreme
Court's
27, 2005
913
in Metro-
Goldwyn-Mayer Studios, objections
these
are
v.
Grokster,
Ltd., 545 U.S.
(2005) ("Grokster").
waived any
These
both
waived
and
groundless. Defendants
of their motions
have
objections
and in their
on
grounds because
to
in support
for summary cite
to
judgment
and
opposition
2003 and
plaintiffs' motion,
documents.
defendants
themselves
rely
on
pre-August 4,
exhibits
pre-Grokster
exhibits
(See infra § I.A.)
Even
were
In
some
cases,
defendants'
are
the very
to which
they object. (1)
nor
they
of
not
waived, however, these
nor
objections
are
groundless because
neither
the
statute
limitations,
to the
the
"continuing infringement doctrine" retroactivity
evidence is
a
the Chevron
not
exception provide
has
a
principal
of
rule
of evidence
and, thus, do
basis
for
excluding
effect
that
(see infra § I.B);
and
(2)
the
Grokster
decision
retroactive
(see infra
§ i.c). Second, defendants
admission of 33
object
of which
to
certain
deposition testimony excerpts produced
to
and
the
documents,
in
most
were
plaintiffs
over
a
year
ago,
and
marked
as
exhibits
depositions
without
objection by defendants,
on
the
grounds
Volumes
I-X
referenced
above,
or
XI to XII
to
the
Declaration
of Katherine
B.
Forrest,
("Forrest 11/7/08 Decl."), submitted herewith. Excerpts from Tr. __"), reports of the parties' experts (" deposition testimony (" Report ") and Declarations Decl. __") cited herein are (" arranged alphabetically by the
November
dated
7, 2008
witness Exhibits
or
expert's
last
name
and
are
contained
in Volume
XI and
Volume
XIII
of the
to the
Forrest
11/7/08
Declaration.
that
they
are
settlement
related.
In
fact, these
documents
relate
to
contemplated
sale of Lime
business
negotiations
and
transactions
with
non-parties involving
subscribers of LimeWire
the
possible
Wire
LLC, the conversion
into
paying
software
users
engaged
in
infringement
reduce
or
of
digital
music
files, and the implementation of
music files.
a
filtering capability
As
to
prevent the exchange of such unlicensed
Rule of Evidence 408
explained below,
of this
Federal
("Rule 408")
not
does
not
bar
admission
or
evidence,
in
as
defendants
argue,
because
it does
constitute
"conduct
statements
made
compromise negotiations",
defendants
themselves have waived
Fed.
R. Evid.
408(a)(2) (see infra § II.A);
inter
but
even
if it
did,
their
objections by,
alia, using this evidence
affirmatively
(see infra § II.B). Argument
I.
EVIDENCE NOT
THAT
PRE-DATES
AUGUST
4, 2003
AND
GROKSTER
IS
PRECLUDED Defendants claim that evidence
pre-dating August 4,
be excluded
as
2003
and
the
Supreme
statute
Court's
decision
in Grokster
should
beyond
the
applicable
have
of limitations
and Grokster's
to the
prospective application. First, they
now
defendants
waived
their
objections
evidence
evidence defense.
or
seek
to
exclude
by affirmatively using
no
that
very
same
in their
Second, defendants
to
provide
authority
in Chevron Oil
applying
Co.
v.
statutes
of limitations
the
exception
evidence.
retroactivity described
do not
Huson, 404 U.S.
97
(1971),
to
Third, defendants
to
meet
the
elements
required
A.
to
invoke
Chevron's
exception
Their
retroactivity. by Using
the Evidence
Defendants' Now Seek
to
Waived Exclude.
to
Obieetions
They
Defendants
object
84 of
plaintiffs' exhibits, listed
a
on
Exhibit
B to
defendants'
memorandum
("Exhibit B"),
copy 3
of which
is attached
hereto, both
on
the
grounds
decision.
that
they
are
dated
before
August 4,
both
2003
and
before
the June
27, 2005
motion
Grokster
But
defendants'
3
own
exhibits
in
opposition
motions
to
plaintiffs'
for
4
partial
also
summary
judgment
and
in
support of their
the Grokster
own
for summary
judgment
pre-date August 4,
are
2003
and
decision.
Indeed, 18 of defendants'
with these motions.
5
exhibits
the
exact
same
exhibits
to which
they
on
now
object
Thus, party
cannot
defendants'
objection
the admission
to these
exhibits
both
grounds
on
are
waived
since
a
object
to
of evidence
that
it invokes
its
own
behalf.
See, e.g.,
any
Capobianco objections
Watson
v.
v.
City of New
York, 422 F.3d
of the
47, 55 (2d Cir. 2005) ("defendants waived
to the
admissibility
reports by offering them
themselves");
see
also
LonglslandR.R.
were
Co., 500 F. Supp. 2d 266, 269 n.5 (S.D.N.Y. 2007). waived,
as
Even
if
their
objections
B.
not
shown
below, defendants'
the
to
objections
are
meritless.
Neither
the
Statute Nor
Doctrine", Admissibility
With
Nor Limitations· the Chevron Exception Rules of Evidence
of
"Continuing-Infringement
the
Principal
Have No
of
Retroactivity
Are
and
Thus
Bearing
on
of Evidence.
to
respect
the
documents
dated
prior
to
August 4, 2003, defendants
years, all evidence dated
argue
that
because
applicable limitations
period
is three
1, 2, 3-5, 7, 9-14, 15, 16, 18, 19, 20, 21, 23-25, 29-31, 33, 34-36, 47, 59-62, (all pre-date August 4, 2003 and Grokster); ld. Exs. 37, 9-14, 16-18, 21-31, 32, 34-42, 50-56, 58-62, 64, 67, 73, 75, 78-79 (which pre-date Exs. 1, 2, 15, 19, 20, 32 and Grokster). Although it is not obvious from the face ofDefs.'
64 of which
3
See
Baker
9/26/08
Defs.
Exs.
they ¶¶ 15-21.)
47 that
4
are
pre-2003
and
pre-Grokster, they plainly
are.
(See
Forrest
11/7/08
Decl.
See
Baker
7/18/08
and
Grokster);
5
Id. Exs.
Baker Pls.
1, 27, 29, 30-31 (all of which pre-date August 4, 2003 1-4, 8-10, 16, 18-23, 25, 27-32 (which pre-date Grokster).
Defs. Exs. 9/26/08 Exs.
Compare
59, 60, 61, 209, 207, 208, 236, respectively.
62 with
1, 2, 4, 5, 6, 14, 18, 23, 24, 29, 33, 34, 35, 58, 52, 3, 95, 68, 97, 76, 37, 251,195, 233,222, 221,243, 21,
Defs.
Exs.
4
more
than
three
years
before
the
filing
because
of the
lawsuit
is "irrelevant".
(See Defs.'
not
Br.
at 5-
8.)
That
specious argument
not
fails
statutes
of limitations
are
evidentiary
commencement
rules--
i.e., they "do[]
of the limitations
operate
to
bar the
that
use
of
a
document
that
predates
the
period
but
is relevant
to
events
during the period". 1992); ef
United
Sir
Speedy,
v.
Inc.
v.
L&P
Graphics, Inc.,
509 F.2d
957
F.2d
1033, 1038
(2d
Cir.
States
Ashdown,
not
a
793,798
(5th Cir.
1975) ("[t]he
it "has
no
statute
of limitations
is
a
defense...,
rule
of
evidence";
The
accordingly,
bearing
on
the
admissibility
make
of
evidence")).
reference
"continuing-infringement
Br.
at
doctrine"
to which
6
defendants
make
(see
Defs.'
7-8) similarly
even
has
no
application.
to the
Rather
than
attempt
to
argue
contrary
to
--
that
statutes
of
limitations
evidence
or
the
"continuing infringement
try
to
doctrine"
apply
exclude
background
exhibits
--
defendants
2003
to
convince
the Court
that
plaintiffs
outside
offer
pre-dating
statute
August 4,
establish
a
claim
based
which
upon
activity
is not
of the
applicable
do not
of limitations
(see
Defs.'
Br.
at
6-7),
simply
the
true.
Plaintiffs
seek
to
recover
for conduct
offer
that occurred
dated
prior prior
to
to
applicable
to
limitations
period. Rather,
of
plaintiffs
evidence
August 4, 2003
show
the evolution
admissibility bar by "continuing-infringement doctrine" to copyright cases to precludes plaintiffs' use ofpre-August 4, 2003 evidence intent. (See Defs.' Br. at 7-8.) The Second Circuit's prove rejection of the for infringement that begins "continuing-infringement doctrine", which permits recovery the limitations before into it, means that "[r]ecovery is allowed period but continues only for those within three years of suit". acts Stone v. Williams, 970 F.2d 1043, occurring 1049 (2d Cir. 1992) (emphasis added); accord Sadhu Singh Hamdad Trust v. Ajit and Commc 503 F. Supp. 2d 577, 585 (E.D.N.Y. 'ns, Inc., Newspaper Adver., Mktg. Press, 3 F.3d 656, 662 (2d Cir. 1993). Like the 2007); see also Kregos v. Associated of limitation it was intended the doctrine its absence statutes to expand, neither nor in any way to the admissibility of evidence. relates
a
6
Defendants
spuriously equate
Second Circuit's
contending
that
the
limitation recovery refusal to apply the
with
an
defendants' encouragement
is consistent
business
and
and
the basis
for and
development
the
of defendants' LimeWire
intent,
software.
7
knowledge
Second
of
infringement using
view, which
may
not
recover
Such
use
with
8
the
Circuit's
defendants
do not
dispute (see
occurred
Defs.'
Br.
at 7
n.2.),
that
"although plaintiffs
of such
for conduct be admissible
that
prior
on
to
the limitations motives
period, evidence
which
acts
conduct
may
to
shed
light
the
with
within
the
limitations
957 F.2d
at
period
were
performed".
Cooper,
the
140
F.3d
at 441
(citing
Sir
Speedy, Inc., object
1038). Accordingly, because
to
evidence
to which
defendants
intent
to
is
provided
establish
the
evolution
of defendants'
state
of mind
and
induce
copyright infiingement
recover, has
as
--
and
not
to prove
infringing
believe
--
acts
for which
plaintiffs
seek
to
defendants
would
have
this
Court
the
three-year limitations Similarly,
period
with
no
application.
to
respect
documents
dated
prior
to
the
Supreme Court's
of the
decision
in
Grokster,
defendants
nowhere
explain
how
the
general principles
of evidence only authority discussing the exclusion is, therefore, that any commercial inapposite. In Gero, plaintiff, an artist, unable to produce evidence within the applicable limitations produced by defendants, a soda company, period had affidavits of witnesses who claimed to have infringed his work, sought to introduce viewed a commercial work outside the applicable statute of infringing plaintiff's limitations. See Gero v. The Seven-Up Co., 535 F. Supp. 212, 214-17 (E.D.N.Y. 1982). The Gero court refused those affidavits, which to consider plaintiff proffered as support for a claim based of the statute on activity outside of limitations. Id. at 217 n.3.
8
7
Defendants'
Although defendants
to the context
contend
that
the relevance and
to
ofpre-limitations
claims, there
and claims the
period
is
no
evidence rule of
is limited
of
Second
employment
Circuit have
discrimination of
logic
or
law
courts
that
limits
its "relevance"
Indeed,
relevant.
in the
or
employment (and elsewhere) adjudicating
also treated evidence
claims
discrimination. unrelated
to
as
employment
discrimination
Sir
fiduciary duty);
F.2d WL 365
Cooper v. Parsky, 140 Speedy, lnc., 957 F.2d at 798 (criminal fraud); Am. Dream Enter., lnc. v. Trump, No. 95 3275, at "1-2 (S.D.N.Y. Jan. 3, 1997) (breach of contract); United F. Supp. 2d 493,505 (S.D.N.Y. 2005) (criminal conspiracy).
See, e.g.,
period F.3d 433,440-41 (2d Cir. 1998) (breach of at 1038 (breach of contract); Ashdown, 509
Civ. States
outside
limitations
0625, 1997 v. Saneaux,
retroactive
application
Even
of
judicial decisions
Court
would
impact
those
of
evidentiary
Grokster should
not
considerations.
if this
agreed
with
defendants'
view
that
have retroactive
application, defendants
with the relief
before that
cite
no
authority
as
that
would
enable
the
Court
to
provide
conduct
them
sought
--
to
exclude
irrelevant
all evidence
relating
to
occurring
decision.
Defendants' the
failure
to
provide authority applying
of
statutes
of limitations
or
Chevron's
exception
moot
to the
principle
evidence
retroactivity
to
evidence
renders
those
arguments
C.
and
plaintiffs'
that
admitted.
Evidence Grokster Evidence
Pre-dates
the
Grokster and
Decision Even Claim
is Admissible
Because Such
Applies
Retroactively
to
If It Does for
Not·
is Relevant
Plaintiffs'
Contributory
Infringement.
On
remand, the district
913
court
applied
summary
the
Supreme
on
Court's
ruling theory
of
in
Grokster,
inducement
Court's
545
U.S.
(2005)
based
and
granted
evidence
judgment
the
of
copyright
See
upon
that, necessarily, pre-dated the Supreme
lne.
v.
decision.
generally Metro-Goldwyn-Mayer Studios,
454 F.
Grokster,
so,
Ltd.
("Grokster (Remand)"),
court
Supp.
2d 966
(C.D.
it to
Cal.
2006).
its June
In
doing
the
district
noted
that
the
Supreme
ld.
Court
intended
apply
the
27, 2005
Court had
ruling
hinted
to
the
remaining defendants,
summary
at 992
(observing
for
that
"Supreme
that
judgment should
Court that
be
granted
Plaintiffs"). Despite
decision
to be
this
clear
indication
by
and
to
the
Supreme
the very
it intended
its Grokster
applied retroactively,
that that decision should
defendants
to
in that
case,
defendants
at
here
contend
not
be
applied
them.
(See
Defs.'
Br.
8-10.) give
do any
reason
Defendants
from the Grokster defendants.
do not
that
they should
be treated
differently
that
a
Nor
they dispute
the well-established
principle
federal
court's
ruling
to
"must
be
given
full
retroactive
effect
in all
cases
still
open
on
direct
review
and
as
all events,
regardless
Margo
v.
of whether
such
events
predate
or
postdate [the]
announcement
of the rule".
Weiss, 213 F.3d
509 U.S.
55, 60 (2d Cir. 2000) (quoting
Harper
v.
Virginia Dep
't
of Taxation,
the
86, 97 (1993)) (emphasis added).
intentions in Grokster and argue
Instead, defendants
to
simply ignore
that Grokster
Court's
(contrary
those
intentions)
established
a new
theory
Oil
of
secondary liability
v.
precluding
its retroactive
application
at
under
Chevron
Co.
Huson, 404 U.S.
Chevron
test
97
(1971). (See
where
to
Defs.'
Br.
9-10.)
Defendants
are
wrong. whether
The
only applies
be
the
Supreme
Court
"reserve[s] Harper,
509
the
question
at 97.
9
its
holding happen
that
should
applied
the
parties before
as
it".
U.S.
That
did not
in Grokster.
Instead,
had
described
"hinted"
above, the district
as
court
on
remand
believed
the
Supreme Supp.
Court
actually
to
its
preferred analysis
result.
Grokster
(Remand),
454
F.
2d at
992.
Accordingly,
Even
Chevron's
is
inapplicable.
defendants
cannot
were
Chevron
applicable,
established
a
establish
its
requirements: application Grokster;
404 U.S.
(1)
that
Grokster
new
rule
of
law; (2) that retrospective
of the rule established in
of the decision and
will
retard
the purpose
will
and
effect
(3)
that
retroactive
application
produce substantial
inequity. Chevron,
at
106-07.
First,
Grokster
did
not
create
a
"new"
theory
is
a
of inducement.
As the
Supreme
Court
recognized
545 U.S.
in
Grokster,
inducement
principle "recognized Harper Bros.,
222 U.S.
in every
part of the law".
at 935
(quotingKalem
Co.
v.
55, 62-
9
In
v.
Ditto
light of Harper, the continuing validity McCurdy, 510 F.3d 1070, 1077 n.5 (9th
of Chevron Cir.
2007)
open (stating that
is
an
question.
Chevron
See
was
63
(1911)).
an
Neither
is inducement
a new
basis
for
secondary infringement liability.
a
In
fact, it is law",
1°
element
of
contributory infringement,
for
theory
"well
established
in the
which
was
the basis
plaintiffs'
Court
claims
in the most
recent
secondary copyright
v.
infringement
case
the
Supreme
417
has decided,
See
Sony Corp. of Am.
545 U.S.
at 930-34.
Universal
City
court
Studios, lnc., 464 U.S.
established
a
(1984).
Grokster,
In
Sony the
from the
rule
that
"limits
imputing culpable
distributed
intent
as
a matter
of law
characteristics
established that
or
uses
of
a
product". beyond
uses,
a
Id.
at 934.
The
Grokster
decision
"where
evidence
be put to
goes
product's characteristics
and shows
statements
or
or
the
knowledge
to
that
it may
infringing
actions
directed
promoting infringement, Sony's staple-article
rule
will
not
preclude liability".
Id.
at 935.
Whatever
Chevron. A decision
novelty
Grokster
did introduce of law
is far below
the
high
bar
set
in
becomes
a new
principle
"either
by overruling
an
clear
past
precedent impression
The
on
which
litigants
resolution
may
was
have relied..,
not
or
by deciding
issue
of first
whose
clearly
foreshadowed".
Chevron, 404 U.S.
an
at
106.
Grokster
decision
neither
overruled
Sony,
nor
decided
issue
of first
impression,
rules of
but, instead, merely
fault-based
545 U.S.
clarified
that
an
expansive reading
common
of
Sony
to
"foreclose
liability
at 934-35.
derived
from the
law"
was
inappropriate.
that Grokster's
Grokster,
Moreover,
defendants'
argument
impact
was
not
"discredited
10
by"
and
"effectively
even
overruled should
to
in
Harper").
have
as
prospective application, which, object as pre-Grokster also element of plaintiffs' claim for contributory infringement (see support the inducement Pls. 7/18/08 SOF ¶¶ 539-40), which, as shown above, certainly was not created by Grokster. Accordingly, the evidence must not be excluded.
shown
Accordingly,
if Grokster
only
here, it should
not, the
exhibits
which
defendants
foreshadowed
is belied
by
--
the fact
that
as
early
as
2004, they themselves Grokster,
Circuit's of the
--
Lime
Wire
LLC, Gorton
and
Bildson
wrote,
remand
in advance
of
anticipated
in that
case.
effect
of the
Supreme infra
at
Court's
reversal
or
of the Ninth
decision
(See
17-19.) Second, defendants
argue
that, because
the rule's
copyright
purpose
inducement
requires
for
intent, retroactive
application
not
contravenes
by creating liability
parties
the
who
could
have
intended
to
infringe secondarily, thus, effectively eliminating
at
intent
requirement.
of the intent
(See
Defs.'
Br.
9-10.) However, nothing prior
under
to
in Grokster
impacted 8-9.)
intact, and
the nature
requirement
Grokster is
as
it existed
Sony. (See
supra
at
Culpable
intent
under
culpable
intent
Sony, leaving
the rule
precluding
evasion
of
liability
the
for
inducing infringement.
to
In contrast,
failure
apply
Grokster
retroactively
of
would
shield
defendants
from
liability
under
an
unintended
reading
Sony, whereby
even
courts
would
apply Sony's staple-article
was
rule
to
limit
or
preclude liability
--
where
intent
to
infringe
Wire
firmly established.
denial of
Under
such
a
reading
a
reading defendants
for
urge
--
Lime
LLC's
knowledge
of the utilization
of LimeWire
copyright infringement
it from
and
the
purported non-infringing
face of massive
uses
of LimeWire
would
immunize
liability
and
even
in
the
evidence
showing (LW)
statements
and
actions
promoting
see
encouraging
SOF
infringement. ¶¶ 140-529.)
(See Pls. 9/26/08
Add'l
SOF
¶¶ 1-49;
also
Pls.
7/18/08
Third, defendants'
argument
the facts.
that
retroactive
application
is
would
be
substantially unfair
is belied
by
have
Defendants'
contention
premised
rule existed
upon
the
assumption that they
would
acted
differently
had
the
Grokster
earlier.
10
Yet, since
Grokster
came
down
and
defendants
filter
became
aware,
at a
minimum,
of their
obligation
still have
to
implement
an
effective
(see Gorton
9/26/08
Decl.
7 36), defendants
behavior
to
not
implemented
with
such
a
filter
or
substantially
argument
THE
shifted
their
in any
way II.
comply
RULE
Grokster.11 Thus,
DOES NOT
their
is without
merit.
408
RENDER
PROFFERED
EVIDENCE
INADMISSIBLE
Defendants
claim
that
Rule
408
renders
certain
evidence
that
they
33 exhibits and
produced inadmissible. deposition testimony
memorandum that
Rule
408, however,
seek
to
does
not
bar
admission
of the
defendants
a
exclude, listed in Exhibit
is attached
A to defendants'
("Exhibit A"),
the
copy
of which seek
hereto.
either
First, Rule
has
408
does
not
apply
with
because
evidence
of any
to
defendants
or
to
exclude
plainly
nothing
with
to
do
negotiations
unrelated
kind
relates
to
contemplated business
transactions
non-
parties
408
the
settlement
of
litigation. (See infra § II.A.) Second,
because
even
if Rule
somehow
applies,
the
same
it has
been
waived
defendants
have
themselves
relied
on
and
utilized
facts.
(See infra § II.B.)
copyright 9/26/08 Decl. 7¶ 37-38; see also Bildson 9/10/08 Decl. ¶ 15-17.) (See Gorton acknowledges as much, but conveniently blames plaintiffs' unwillingness to provide a list of copyrighted works to Lime Wire LLC. (See Gorton 9/26/08 Decl. 77 37is misleading. Even if plaintiffs had provided Lime Wire LLC with excuse 38.) Gorton's a list of copyrighted works, a filter relying solely on the hashes derived from that list
not
nor
11
Lime
Wire
LLC
currently
does
have,
has
it
ever
had,
an
effective
filter.
Gorton
would hashes.
not
be effective Pls.
a
because SOF
identical
audio
files may
On the other
have
an
infinite Gorton
number could
of have
hand, 7¶ 478-480.) truly effective filter even without plaintiffs' list of copyrighted songs by of the third-party filtering companies with whom he negotiated (see infra at limited infringement by adopting the strategies he proposed to third parties in the "conversion code", "auto upgrade" or "forced plans", i.e., "time-bombed upgrade". (See infra at 15 n.14, 21-22.)
(See implemented engaging one 19, 21-22), or
7/18/08
11
Ao
Rule Because
408
Does it Does
Not Not
Bar
Admission
of the "Conduct
Evidence
or
in Exhibit Made
A in
Constitute
Statements R. Evid. in
Compromise
Under Rule
Negotiations" 408, "conduct
admissible..,
or
Pursuant
statements
to
Fed.
408(a)(2). negotiations
made
compromise
regarding [a]
of,
or
claim"
are
"not
when
offered
to prove
liability for, invalidity
whether
to
amount
of
a
claim".
See
Fed.
R. Evid.
408(a)-(a)(2).
considers
In
determining
exclude
evidence
under
the
rule, the Court
v.
the circumstances
of the conduct
or
statements.
See
Wechsler
HuntHealth
Sys., Ltd., 381 F. Supp. 2d 135, 151 (S.D.N.Y.
and the existence of
a
2003) ("Both the timing of the offer
the
disputed
claim
are
relevant
to
determination.") (citations omitted).
The party
seeking
the
to
exclude
evidence
under
Rule
408
must
make
a
"substantial
showing"
Prods.
that
evidence
was
part of
an
attempt
to
settle
the
dispute. See,
Music
e.g., lnt'l
Raybestos
v.
Co.
v.
Younger, 54 F.3d
1234, 1241 (7th Cir. 1995); Rondor
WL
TVTRecords
LLC, No. CV 05-2909,
have made
no
2006
5105272,
at *11
(C.D.
12
Cal.
Aug. 21, 2006). Defendants
1. Evidence It Has Several
such
"substantial
To Exclude
showing".
Defendants
Seek Do with and
Is Admissible of
Because
Nothing
to
Negotiations
Any
Kind. in defendants'
of the documents
deposition excerpts negotiations.
listed
Exhibit
A are,
on
their
face,
not
related
to
settlement
(See
Exhibit
A at
Exhibits
41, 42, 43, 44, 285, 325, and Cho and Gribble First, three
of the documents
on
testimony.)
A
are
Exhibit
public
have
articles
or
blogs
that
mention
Lime
Wire
LLC.
Obviously,
such
public
documents
absolutely nothing
to
do not even Notably, defendants try and explain the basis for their objection as to exhibits, choosing instead to lump all of them together. (See, e.g., Defs.' Br. particular at 1-5 and Exhibit can A.) Plaintiffs only guess as to the basis for defendants' objection to a particular exhibit.
12
12
do with
settlement
discussions
nor
any
attempt
to
settle
a
dispute. (See Exhibits
42, 43,
44.) Second, Exhibit
discomfort with Lime Wire 285 is
a
dratt
letter
from
Jesse
Rubenfeld
expressing
decision.
his
LLC's
lack
of
compliance
letter with
with
the
Grokster
Rubenfeld's
testimony
its contents
is that
he
wrote
this
his
attorney, but instead
Tr.
of
sending
His
it, discussed
letter relates
with
Mark
Gorton, his boss.
at
(Rubenfeld
52:2-63:13.)
to
filtering (see infra
argue that it
was
19-22),
not
settlement.
Indeed, defendants
do not
even
attempt
to
written
for settlement
purposes. with
Third, Exhibit
which
325
is
an
e-mail
chain
Mashboxx,
a
non-party,
Mark
in
Greg Bildson,
to
even
on
behalf
of Lime
Wire
LLC, tells MashBoxx
--
that
Gorton
is
reluctant
begin
not
discussions
with
them
hardly
the
a
negotiation.
with whom
Moreover,
it
Lime
Wire
LLC
does
include
a
Mashboxx
among
parties
alleges
325
it
was
negotiating
"conduct
or
and
developed
"plan". (Defs.'
in settlement 41 is
Br.
at
4.) Nothing
in Exhibit
contains
statements
made
negotiations".
chain between Mark Gorton and
an
Fourth,
individual
the
at Time
Exhibit
an
e-mail
Warner
--
a
non-party
a
that
Lime
Wire
LLC
also
did
not
include
among
parties
with
which
it
developed
to
"plan". (Defs.'
Wire LLC
Br.
at
4.) In Exhibit
for
a name
41, Gorton
of
someone
simply
AOL
relates
his intention
sell
Lime
and
asks
at
with
whom
he
can
speak.
we are
Gorton
claims
that
this
sale
"is
going
of
to be
a
huge
opportunity"
users
and
that
"[i]f
able
to
convert
a
couple percent
This
our
[LimeWire]
to
a
subscription service, that would be huge.
-
deal could
This
be worth
is
a
$50,000,000
not
a
$400,000,000 negotiation.
a
year
in
revenue
"
....
(Id.)
document
sales
pitch,
settlement
13
Fifth,
relates
to
the
deposition testimony
and
of
Stephen
same
Cho
to
which
defendants
object
placing downloads
of defendants'
uploads
in the
folder, (Cho Tr. 80:20-81:7), and Gribble,
Tr.
to
the
testimony object,
own
expert witness,
SIMPP
Steven
which
defendants
also
relates
to
LimeWire's
settings (Gribble
Neither the Cho
201:6-22;
Gribble
203:13-20)
relate
and
LimeWire
updates (id.
to
at
299:25-301:7).
nor
testimony
in
any
way
settlement.
2. Other Because
to
Evidence It Relates
to
that
to
Defendants
Seek
not
to
Exclude
Is Admissible
Business,
with Lime the Wire
Settlement,
Negotiations,
or
Efforts
Comply
and
Law. LLC understood that decision
As shown
below, Gorton
a
favorable
Wire LLC.
to the
copyright-holder plaintiffs
at
in Grokster
was
a
game-changer
for Lime
(See infra
Grokster,
15, 17-19.) Consequently, the day the Supreme Court
issued
its
decision
in
defendants
service
began negotiating provider,
not
a
deal
with
iMesh,
would
a
legitimate
Lime Wire
licensed
LLC.
music
subscription
has
sworn
in which
iMesh
subsume
Wire
Gorton
that
he did
believe
at that
time
he
or
Lime
LLC
would
be sued
for
into
copyright infringement.
conversations with other
Over
time, defendants
music
conversations
with
iMesh
evolved
licensed
providers, including Napster,
Wire LLC
RealNetworks
and
iTunes.
At the
same
time, Lime
began
talks
with
entities
offering effective
Gorton viewed
as
filtering services, including SNOCap, Audible
necessary exhibits
to
Magic
and
Magix,
that
comply
which
with
the law
as
set
out
in Grokster.
The
to
defendants
now
object
were
created
as
part of those
business
negotiations.
They show,
among
other
things, knowledge
that
LimeWire's
14
entire
userbase
was
engaged
in
copyright infringement,
A, Pls. Exs.
for
13
and
an
understanding
as
to
how
to
stop the infringement.
the evidence
on
(See Exhibit
motion
56-62, 151,265-278.)
summary
Now, faced
demonstrates
with
plaintiffs'
intent
partial
judgment
that
conclusively defendants'
evidence
to induce
copyright infringement,
is inadmissible
defendants
protest
408 because
that
relating
of the
to these
business
dated
negotiations
under
Rule
many months
exhibits
are
after plaintiffs'
"cease
and
desist"
letter, 4.)
a
sent
several
after
business
negotiations
what
began.14(See
in
Defs.'
Br.
at
However,
settlement
but
is relevant
determining during
whether
document
was
relates
to
negotiations
is not
the
point
in time
which
the document
created,
the motivation
for the document's
creation.
As shown
below,
it
was
defendants'
from the
belief
that
and
understanding
that
of the
change
in the
legal
environment
resulting
--
Grokster
decision
led them
to
the business
negotiations
at issue
not
plaintiffs'
13
Gorton
to
believed
music
that
users
legitimate
converting even purchasers would
"a
mean
couple percent"
revenues
of LimeWire's
infringing
$400 million.
between
$50
to
(See Ex. 41 .)
object to most of the deposition testimony surrounding Instead, they object to small snippets of testimony that simply are not made in or statements protected by Rule 408 because they do not reveal "conduct defendants Catillaz in which she compromise negotiations". First, object to testimony Plans with either simply testifies that no one ever told her that the proposed Conversion RealNetworks or Napster not feasible. were (See Exhibit A; Catillaz Tr. 259:9-12; 259:21-260:2 (see Pls. Ex. Vol. VI)) Similarly, defendants object to Catillaz's testimony that no one told her that "forced upgrade" or "auto upgrade" concepts were ever not feasible. (ld. at 285:22-286:3,288:6-288:22.) Second, defendants object to Catillaz's in which she says only that it was Mark Gorton's idea to reeducate LimeWire testimony users (id. at 267:22-268:21) and that Gorton coined the term "hardcore pirates" to describe of LimeWire a large segment These users. at 323:19-323:21.) (ld. objections have nothing to do with settlement and everything to do with protecting Mark Gorton. Third, defendants object to only one portion of Jesse Rubenfeld's testimony (see Exhibit Tr. 332:11-333:17 A; Rubenfeld (see Pls. Ex. Vol. VII)) in which he testifies that he recalls work relating to the "value of a converted LimeWire for sound user doing recordings". None of this testimony falls under Rule 408.
these
14
Oddly, defendants
do not
documents.
15
"cease
and
desist
letters".
A
change
in the
legal
made
environment
that
makes
litigation
"conduct
or
more
likely
statements
does
not
make
all business
decisions
in
light
of that
change
Corp.
v.
v.
made
in
compromise negotiations". (S.D.N.Y. 1998) (see
Union
Union
Carbide
Montell
N.
V., 28
F.
Supp.
2d
833,841
1130
Carbide
Corp.
See also
MontellN.
V., 944 F.
v.
Supp. 1119,
Harvester
(S.D.N.Y. 1996) for underlying facts).
1551, 1556-57
while
Deere
& Co.
Int'l
Co., 710 F.2d
was
(Fed.
were
Cir.
1983) (fact that patent
in
license
with
third
party
negotiated
inadmissible
parties
locked
dispute
over
the
patent does
v.
not
render
license
evidence
of settlement
negotiations);
a
Mendelovitz
Adolph
Coors
Co., 693 F.2d
570, 580 (5th Cir. 1982) (finding
letter
between
litigating parties
not
not
to be
part of settlement
or
negotiations,
claim in this
since
"on
its
face, [the letter] does
defendants
Br.
at
offer
an
to
compromise
settle
any
action").
As
even
concede,
also Deere
"actual
dispute"
710 F.2d
is
required
1556
for Rule
408
to
apply. (See
could
Defs.'
2.)
time
See
& Co.,
at
(noting
no
dispute
lnc.
v.
be identified
at the
of the
1973
offer);
accord
Big 0 Tire Dealers,
Cir.
Goodyear
Tire
& Rubber
Co., 561 F.2d
had
1365, 1373
not
(10th
1977) (affirming
to
admission
of evidence
where
"discussions
cut-off
crystallized
the
point
of threatened
litigation,
business
a
clear
point").
Lime Wire LLC
That
months
after
such
negotiations started,
did
not
received
a
"cease
and
desist"
letter
from
the RIAA
transform
documents
created
as
part of business
settlement
negotiations negotiations".
into
15
documents
that
were
"only
created
in order
to be
part
of the
(Defs.'
Br.
at
4.) Defendants
cannot
claim
that
15
Indeed, the "cease
to
and
desist"
letter
did
not
demand
that
defendants
sell
their
business
from
iMesh and Pls.
or
anyone
else, but merely that they "immediately cease-and-desist
the SOF
enabling
see
inducing
7/18/08
301,
also
infringement of ¶ 535.) Gorton's
16
RIAA decision
member
to
sound sell
was
recordings".
thus
one
(Ex.
of two
business
negotiations prompted by Grokster
as
were
for settlement
purposes
and
protected
by
408
shown
by
the
following
brief
chronology.
year after the LimeWire software
In October
2001, just
an
a
launched,
copyright
in connection
holders
began
the
action
for
contributory
file
and
vicarious
copyright infringement
with
distribution
See Grokster
of the P2P
sharing applications Grokster,
F.
Morpheus
court
and
Kazaa.
(Remand),
in favor of the
454
Supp.
2d at 970-71.
The
district
granted
v.
summary
judgment
P2Ps, Metro-Goldwyn-Mayer
Studios,
Circuit
lnc.
Grokster,
Ltd., 259 F. Supp. 2d 1029 (C.D. Cal. 2003), and the Ninth Studios, lnc.
Lime Wire
v.
affirmed.
Metro-Goldwyn-Mayer
In its 2004
Grokster, Ltd., 380 F.3d
discussed the Grokster
1154
(9th
--
Cir.
2004).
Marketing Plan,
Circuit
--
LLC
case
then
pending stating,
look
to
before
the Ninth
in its "Political
and
legal
environment"
section,
should
inter
alia, "in the
event
that
it is decided
that
Grokster
is
liable, LimeWire
issues
or
developing technology
16
that
is far from
any
possible copyright
argument
of
non-neutrality".
(Ex.
97 at LW
DE
1172924-25.)
(in which case the sale negotiation cannot negotiation) recognition that no viable business existed has no substantial inducing copyright infringement i.e., that LimeWire
a
things:
business
decision
be considered in the absence
a
settlement
or
a
of
--
non_infringing
use.
That,
16
of course, Wire LLC
is also
true.
Lime
was
also
keenly
aware
of another of Australia file
Sharman
Networks
to
Ltd.
in the Federal of the Kazaa
Court P2P
respect
"LimeWire
its distribution 2004
Marketing Plan", defendants
pending at the time against copyright infringement with sharing application. In fact, in its stated that "[t]he significance of this case
for
suit
Australia, LimeWire found liable, because
with no offices in As a company against Kazaa] is unclear. be free from copyright fraud prosecution even if Kazaa is might [the Music Industry Piracy Investigations, an intellectual property rights enforcement organization in Australia] had to physically search Kazaa's computers for electronic evidence. of the trial and public support for Nonetheless, the outcome Australia lawsuit Kazaa
[the
should
that "the
be
accordingly."
found
in Australia monitored monitored, and LimeWire's presence 97 at LW DE 1172925-26.) In 2005, the Federal Court of Australia (Ex.
predominant
use
of Kazaa
was
for the
sharing
of
copyright-infringing
17
The
Supreme
Court
agreed
to hear
the matter.
Metro-Goldwyn-Mayer February 21, 2005,
LLC's then Chief before the
Studios, lnc.
v.
Grokster,
issued
Ltd., 543 U.S.
in
1032
(2004).
Lime
On
Supreme
Officer
Court
its decision
Grokster,
Wire
Technology
court
and
Chief
Operations Officer, Greg Bildson, upheld
99 the
wrote
that
the
district
in
California,
software". have
"has
right
of software
companies
also Ex.
to
create
and
sell
our
[LimeWire] "It]he
courts
(Ex.
our
(emphasis added); rights
be
a
see
320.) He also
wrote
that
affirmed
to
produce
and
sell
this
[LimeWire] software. Supreme
that Court in the
If there
is any Grokster
change..,
case".
it would
negative ruling by
the
pending
such
a
(Ex. 316) (emphasis added). Bildson
added
if there
was
ruling
to
"we
[Lime Wire] will have
.
plenty
in
our
of lead
time
to make
changes existing
to
our
services
customers.
there
would
be value
trying quoted
to
to transition
users
[to
a
different
that
product
or
service]". (ld.) Supreme
company Court
Gorton
was
in the New
York
Times
as
saying
"'[i]fthe
LimeWire the
says
it is
illegal
produce this [P2P file-sharing] software,
will
cease
to
exist'".
(Ex. 201.)
States
On June that
27, 2005, the United
the P2P file
Supreme
Court
unanimously
be held
ruled
the
companies distributing
a
sharing applications
its
use
could
liable
for
distributing
"inducement
after this
device
with
the
object
of
promoting
U.S. 913
for
In
copyright infringement (the
an
doctrine").
Gorton
Grokster,
stated
545
(2005)
had
email
written
three
days
in
decision,
that
the decision
"put the LimeWire
an
business
flux".
(Ex. 323.)
On the
same
day,
Bildson
wrote
in
email
to
Download.corn,
"[w]e
material"
and
found
Sharman
Networks sound
Ltd.
liable
for
copyright infringement
Music 2005 Australia WL
of
v.
plaintiffs' (record companies) recordings Sharman License Holdings Ltd. (2005) 220 A.L.R.
Universal 1
Pty. Ltd.
(Austl.),
2119310.
18
are
in the process
at CNET
of
deciding
And
what
to
do with
the
future
of the
LimeWire
product".
(Ex. 33
00039.)
"I have the law.
Gorton
has
stated:
always run Lime Despite the fact
Wire that
LLC
to be in
full
the effectiveness
compliance of copyright
with
filtering in a P2P client is subject to much debate, when the Supreme Court [in Grokster] specifically stated that a P2P that tried to reduce company infringement by implementing a filter could not be liable for copyright infringement, copyright had Lime Wire LLC build a copyright filter."
(Gorton 9/26/08
Decl.
I
¶ 36.)
Marco of iMesh
Talmon
approached
to
Gorton
on
June
27, 2005
--
the very 1/31/08
day
Decl.
of Grokster
decision
--
with
a
plan
purchase
Lime
Wire
LLC.
(See Gorton
¶ 3.) Marco
of
testified
that
when
he first
approached
version".
Gorton, he explained "the (Marco Tr. 226:2-21
iMesh.
idea
specifically light
has of
converting
Lime
Lime
Wire
to
a
filtered
.) In
Gorton
Grokster,
that
as
Wire
LLC
began negotiations
--
with
Notably,
decision
Mark
swom
of June
"I did
30, 2005
not
three
days after
Lime Wire
the
Grokster
and
Marco's
approach
to
him
--
believe
that
or
I would
be sued
for
copyright
testified
infringement".
that iMesh and
(Gorton
Lime
7/17/08
Decl.
¶ 7 (emphasis added).) Indeed, Marco
on
Wire
LLC
"had
and
off discussions
for about
a
year" up until
around
"summer
of '06"
that
(Marco Tr. 227:4-19), and that during this time, Gorton
he did
not
specifically
stated
"believe
that
that
he
[would] get
that iMesh
sued"
(id.
at
228:18-229:2).
as a
Gorton's
contention
he believed
was
acting
"proxy"
Gorton did
for the
RIAA
(see Gorton
1/31/08
Decl.
¶ 3)
17
is thus
irrelevant,
because
since
17
Marco
has
testified
that
neither
the record and Lime
labels Wire
nor
the RIAA
assisted
in any
way
in iMesh's
that, aside
the RIAA
negotiations with Gorton from meetings informing
nor
the RIAA involved
the
record
labels
were
(Marco Tr. 233:17-234:5), and that negotiations were progressing, neither in the negotiations with Lime Wire LLC.
LLC
19
not
believe
he would
be
sued, he could
via iMesh.
not
possibly
if Gorton's
have
been
negotiating
that iMesh
any
an
sort
of
settlement
with
the RIAA
Even
belief
was
agent
acting
for the RIAA is there
were
correct
(but
see
supra
to
at
19 &
n.
17), defendants
do not
contend,
iTunes
or
nor
a
shred
of evidence
support, talks
LLC.
were
that
RealNetworks, Napster anything
but
and
any
a
other business
Never
entity
deal
involved
in these
independent
entities
negotiating
with
Lime
Wire
18
was
litigation anticipated they
tried
to do
a
between
defendants
and
any
of the
non-parties
transactions
with
whom
deal.
The
evidence
of the
contemplated
made in
cannot
therefore
Rule 408.
be considered
"conduct
or
statements
compromise
Rauch, 644
637
negotiations"
F.2d 1097
under
Defendants
and
reliance
on
Ramada
Dev.
Co.
v.
(5th
Cir.
Unit
B
1981)
merit,
Blu-J, Inc.
neither
case
v.
Kemper
C.P.A.
Group, 916 F.2d
(1 lth 3.)
the
Cir.
1990),
documents
as a
is without
as
provides
evaluative
such
support.
(Defs' by
the
Br.
at 2-
The
excluded
in those
cases
were
reports used
settlement. For
parties
in
to
dispute
centerpiece
to determine
the
appropriate
commissioned
example,
to prepare
Blu-J, lnc.,
an
independent
accountant
was
by
both
parties
process.
an
independent
641-42.
evaluative
report
designed
to
facilitate
the
settlement
926
F.2d
at
Similarly,
in Ramada
Development Company,
an
architect
prepared
a
report
(ld.)
iMesh
Marco and
18
did
testify
that
at one
point
there
was
a
meeting
at which
Lime
Wire
LLC,
the RIAA
were
all present.
to which
(ld.
at
233:9-16.)
Several Warner
of the exhibits
defendants
object
were,
Time
Mashboxx defendants'
versions which
or were
thinking
of
(Ex. 41); Napster (Ex. 265); RealNetworks of (Ex. 325). Others are Conversion Proposals, or pieces or summaries Conversion Plans (Exs. 56, 57, 58, 59, 60, 151,265, 266, 274, 277) or pieces of the Digital Sales Growth Plan (Exs. 61, 62, 273,275, 276, 278), sent to various were third-parties with whom defendants negotiating or were negotiating.
face, directed (Exs. 267, 268, 269); and
on
their
to
20
outlining "arguable
644 F.2d
the
construction
defects
in the motel
in order
to
"identify", for
terms
both
parties,
defects
that
could
then
be discussed
in
monetary
in the
negotiations".
at
1106-07.
In contrast,
many
documents
are
that
defendants
seek
to
exclude
here
(e-
mails,
term
sheets, proposed agreements)
with
business
are
communications
aimed
at
pursuing agreed
partnerships
upon
non-parties.
to
These
nor
documents
were
not
independent evaluations
to
by
both
parties
the
dispute,
they
a
centerpiece
settlement
negotiations
between
the
plaintiffs
under
and
defendants.
Defendants
therefore
provide
with
no
authority supporting
unrelated
to
exclusion
Rule
408
of business
negotiations
non-parties
settlement
with
those
non-parties.
The
challenged
Tr.
evidence
related
to
filtering (see (see
Ex. Vol.
Exhibit
A at Exs.
286,
289-292
and
Bildson
152:16-21,
161:16-162:20
VI))
in
is also
admissible.
Lime
Although filtering provider SNOCap first
Wire LLC made
no
contacted
defendants
for
September 2004,
works
attempts
2005
to
develop filtering
decision.
copyrighted
281
prior
that
to the
Supreme
has
Court's
June
Grokster
(Ex.
and
(Bildson stating
it" and that
"LimeWire
considered
filtering
as
an
option
or
in the past enables
rejected
of any
"LimeWire
will
not
support anything that implies
filtering 286.)
kind");
above
see
also
Rohrs
Tr.
142:14-143:11
(see
to
Ex.
Vol.
VII);
Wire
see
Ex.
As shown
(see supra
at
18-19), comply
according
with
Gorton, Lime
19
LLC
finally
undertook
to
filter
specifically
LLC's
to
Grokster.
(Gorton
9/26/08
Decl.
¶ 36.) Thus,
Lime
Wire
post-Grokster
19
The
very
fact that
Gorton
believed
that
Lime
Wire
LLC
had
his understanding that the business post-Grokster demonstrates for it is copyrighted works that the "filters" meant to are copyright infringement, A "filtering solution" is meaningless without a copyright infringement problem.
implement a filter depended upon illegal
to
catch.
21
filtering attempts
but
an
were,
according
Wire LLC
to
to
defendants
themselves,
the law.
not
part of settlement
talks,
effort
by
Lime
comply
with
B.
The and
Defendants
Have
to
Waived the
Any Rule
Same Facts
408 In
Continuing
Invoke
Objection By Invokin· Support of Their Own
Claims. A
party
cannot
object
to the
admission
of evidence
that
it invokes
on
its
own
behalf.
See, e.g.,
of the
Capobianco,
422
F.3d
at 55
("defendants
see
waived
any
objections
to
the
admissibility
2d at 269
reports by offering them
basic
themselves");
also
Watson, 500 F.
Rule 408: when
Supp.
a
n.5.
That
principle
would
of fair
adjudication applies
the rule's exclusion
to
party proffers evidence
made in
that
fall within
of"conduct
and
statements
compromise negotiations", they
v.
waive
any
objection
936 F.2d
to
its admission
by
the
other
side.
See, e.g., Eisenberg
waived
Univ.
of New Mexico,
to
1131, 1134
(10th
Cir.
1991) ("Ms. Torres
of the affidavit
any
claim
20
Rule
408
protection
by
her
own
submission
to the
court.")
Throughout
now
this
litigation,
own
defendants
21
have
invoked
the very brief
on
evidence
they
seek
to
exclude
--
on
their
behalf.
In their
January 2008
copyright
1966) (waiving predecessor to Rule 408); Allen-Myland, Inc. v. Int'l Bus. Maeh. Corp., 693 F. Supp. 262, 284 n.51 (E.D. Pa. 1988), vacated on other grounds, 33 F.3d 194 (3d Cir. 1994); In re Groggel, 333 B.R. 261,297 (Bankr. W.D. Pa. 2005).
v.
2o
See
also
S. R
'y. Co.
H.W.
Vaughn,
359
F.2d
424, 424-25
(5th
Cir.
common
law
21
Defendants their way
write into
their
motion
as
if the documents but the fact
on
Exhibit
A somehow
plaintiffs' possession, defendants gave were majority of the documents produced over a year ago, although some were produced even earlier. (See Forrest 11/7/08 Decl. ¶ 24.) Notably, defendants exercised their right to recall those documents never under the protective order agreed to by the parties and entered the Court on March by 8, 2007, despite that on that right and recalled other documents. multiple occasions, defendants exercised (ld. Even when plaintiffs marked these documents exhibits at numerous as ¶ 25.) depositions and over over never again, defendants objected. (ld. ¶ 26.)
is that them
to
found
just most of
plaintiffs.
The
22
misuse, defendants
iMesh and its
laid
out
in detail
evidence
of Lime
Wire
LLC's
negotiations
such
as
with
attempts
to
enter
into
transactions
with
third
parties
as
RealNetworks
and
iMesh, the latter
with
of which
defendants
attempted
2008
to
cast
having
an
"incestuous
relationship"
Porter &
plaintiffs. (See January 31,
to
Letter
Brief
from Charles
Letter
Baker,
Hedges LLP,
Decl.
at
the Court
at
11, 14-18
("Copyright
Misuse
Brief');
attached
to
Gorton
1/31/08
7¶ 3-14.)
2006
In his
January 31, 2008
that iMesh
sent to
declaration,
the RIAA
Gorton
his
declaration
a
January 17,
that
letter
laying
out
a
settlement
proposal
(See Gorton Now,
includes
plans
related
to
filtering
and
"converting"
LimeWire
users.
1/31/08
Decl., Ex. F.)
on
summary that
judgrnent,
lacked the
defendants
rely
induce
on
the
same
facts
--
in
detail
--
to
demonstrate
they
intent
to
infringement and,
and
in order
to
comply
with
Grokster,
user
developed copyright filtering techniques
base
to
plans
Mem.
to
convert
their
copyright-infringing 30-32.)
exclude. In his
paying
Gorton
customers.
(See
to use
LW
9/26/08
at
3, 5, 13,
seek
to
latest
declaration,
9/26/08
continues
the evidence
defendants
in his section
(See Gorton
Wire's
Decl.
7¶ 38-42, 45-61.)
and
For
example,
tiffed,
"Lime
Attempts
to
Reach
out
Engage the Recording Industry", Gorton
referenced
Ex. 60
several
exhibits
and
to which
defendants
his
object, including
with iMesh
Ex.
276
(id.
at
¶ 55)
the
and
(id.
at
¶ 57),
Plans"
described
at
negotiations
his
(id.
at
77 46-54),
at
"Conversion
(id.
¶7 45, 54, 58), "gradual
Digital
Sales
Growth
plan (id.
users
7¶ 55, 56,
an
58-60),
and
his
plans for
the
conversion"
of LimeWire
through
23
"educational
campaign" (id.
22
at
¶¶ 45, 55, 56, 59) and "graduated filtering" (id.
evidence defendants seek
to
at
¶¶ 45,
55, 58, 59, 60).
This
is the
same
exclude.
Defendants
cannot
on
the
on
one
hand
submit
evidence
to
support their
position
evidence.
that
they
are
not
liable
and
the
other, prevent
have waived
plaintiffs
any
from
using
that
that
same
(See
also
infra § I.A.) Defendants
protection
Rule
408
might
have
provided.
22
That
defendants
about
rely
for the most
part upon
and conversion
Mark
Gorton's
--
filtering plans does not negate the waiver of deposition testimony proffered by plaintiffs Rule 408. A contrary rule would the party with personal knowledge of settlement permit facts while denying the other party the negotiations to rely upon settlement-related to do the same, the bilateral of the waiver. See Fed. R. nature opportunity nullifying Evid. 408 advisory committee's note (2006) ("the protections of Rule 408 cannot be waived declarations of facts of settlement unilaterally"). Using negotiations implicates the policy concerns and testimony underlying Rule 408 just as much as using documents those facts. to demonstrate See Am. Soe 'y of Composers, Authors & Publishers v. Showtime/The Movie Channel, Inc., 912 F.2d 563,581 (2d Cir. 1990) ("Rule 408 is based the policy of aiding the compromise and settlement of disputes.") (quoting 2 Jack B. upon Weinstein and Margaret A. Berger, Weinstein "s Federal Evidence § 408.02 at 408-4 (2d ed. 1986)); see also Fed. R. Evid. 408 advisory committee's note (1972) ("A more consistently impressive ground [for exclusion] is promotion of the public policy favoring of disputes."). the compromise and settlement
rather exhibits and
--
declaration
defendants'
self-serving, rambling than on the specific
24
Conclusion For the
foregoing
denied.
reasons,
defendants'
objections
should
be overruled
and
their
motion
to
strike
Dated:
November
7, 2008
Respectfully submitted,
CRAVATH,
SWAINE & MOORE
LLP,
by
·v._____ · "·.
Katherine Teena-Ann Joanne B. Forrest V. Sankoorikal M. Gentile
Worldwide 825
Plaza
Eighth
New
Avenue
York, NY 10019-7475 (212) 474-1000
(212) 474-3700 (fax) kforrest@cravath.corn tsankoor@cravath.com j gentile@cravath, com
Attorneys for Plaintiffs
Of Counsel:
Karyn Temple Recording Industry
1025 F
Association 10th
of America Floor
Street, NW,
DC
Washington,
20004
(202) 775-0101
(fax) (202) 775-7253 ktemple@riaa.com
25

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